On 3 March, Bulgaria celebrated its National Liberation Day. The holiday commemorated the end of Ottoman rule in 1878, when the country regained its independence. Today the country is a full member of both the European Union (EU) and the North Atlantic Treaty Organization (NATO). These memberships are seen as a key element of Bulgaria’s security and prosperity, as it allowed the country to cooperate with its European neighbors on matters of defense, trade, and diplomacy.
Bulgaria has a rich history and culture, which is reflected in its diverse architecture, cuisine, and music but here in Asia we know very little about this small European country with a population of 7 million people. Nowadays the country is considered as a major producer of agricultural products, such as wheat, corn, fruits and vegetables offering well-educated and skilled workforce, a stable currency, and a strategic geographic location that grants easy access to the European markets. Bulgaria also has strong potential for renewable energy sources, such as solar, wind, and geothermal, which could further boost the economy. Additionally, the low corporate tax rate makes it an attractive destination for foreign investors. With the right policies and investments, the potential of the Bulgarian economy remains strong.
What Opportunities in 2023 for Bulgaria?
Bulgaria’s economy is expected to continue its positive growth, continuing the trend of the past few years with a GDP growth rate of around 3.5%. The economy is supported by strong service sector growth, along with a rise in manufacturing and tourism.
There are several opportunities for businesses and investors in Bulgaria in 2023, including:
Strategic location: Bulgaria is located at the crossroads of Europe, Asia, and the Middle East, which makes it an attractive destination for businesses looking to expand into new markets.
Skilled workforce: The country has a significant pool of highly skilled and educated workers in key industries, particularly in the fields of technology and engineering.
Low taxes: With one of the lowest tax rates in Europe, Bulgaria is an attractive destination for businesses looking to reduce their operating costs. The flat tax rate is 10% for both personal and corporate income tax, which is significantly lower than the average tax rate in Europe.
Tourism: Beautiful coastline along the Black Sea, rich cultural heritage, incredible mountains. This presents opportunities for businesses in the tourism and hospitality industries.
Renewable energy: Significant potential for developing renewable energy sources, particularly wind and solar power. According to the Bulgarian Ministry of Energy, renewable energy sources accounted for around 19% of the country’s total energy consumption in 2020. Wind energy is the most developed renewable energy source in Bulgaria, with a total installed capacity of over 1,000 MW. Solar power is also growing rapidly, with a total installed capacity of over 1,500 MW.
Agriculture: The agriculture sector accounts for around 6% of the country’s gross domestic product (GDP) and provides employment for over 20% of the population. Bulgaria is one of the largest producers of wheat in Europe, with an annual production of around 5 million tons. The country is also a significant producer of corn, sunflower, grains, vegetables, fruits, wine and tobacco.
The Information and Communication Technology (ICT) sector: The Information and Communication Technology (ICT) sector in Bulgaria has grown significantly over the past decade, becoming an important part of the country’s economy. It is estimated that ICT contributes around 6.5% of Bulgaria’s gross domestic product (GDP) and employs around 100,000 people generating around EUR 1.4 billion in annual revenue. The Bulgarian government has implemented various policies to help the ICT sector grow, including tax incentives, grants, and training programs. In recent years, we have seen rapid growth in this sector due to the influx of new technology, increased economic stability, and the emergence of new business opportunities. By 2023, it is expected that the ICT will contribute around 7% of Bulgaria’s GDP and employ around 120,000 people.
Start-up visa programs: In October 2022, Bulgaria introduced the so-called “Start-up visas” available to non-EU entrepreneurs who want to set up a business in the country.
There are several other countries in Europe that offer startup visas or similar programs for entrepreneurs. These programs are designed to encourage innovation, create jobs, and promote economic growth. If you are an entrepreneur interested in starting a business in Bulgaria and more specifically in hi-tech and/or innovative business projects, you can research the startup visa programs offered by The Bulgarian Investment Agency (BIA) – the institution responsible for processing the applications.
Challenges in 2023
Despite some economic progress in recent years, one of the biggest challenges for the Bulgarian government is the population decline due to a low birth rate and emigration. In January 2023 the authorities introduced new measures such as free public transportation and free handbooks for students with the hope to create more favorable conditions for parents and boost the birth rates.
The infrastructure is not as developed as some other EU countries, particularly in rural areas. However, the country has made significant investments in recent years, particularly in its transportation network by building main roads and high-ways connecting Bulgaria with the neighboring countries (Greece, Romania, Serbia and Turkey).
Bulgaria’s main trading partners are the European Union, which accounts for around two-thirds of its trade, followed by Turkey and Russia but its economy is very much influenced by developments in the EU and global markets.
Bulgaria and Vietnam
Bulgaria and Vietnam may be geographically distant, they have been able to maintain a positive and mutually beneficial relationship. The two countries have established diplomatic relations since 1950, and have signed several agreements in various fields, including politics, economy, culture, and education. The two countries have a long history of cooperation in education, with many Vietnamese students studying in Bulgarian universities.
In terms of trade, there are several agreements entered into force for cooperation and partnership in various sectors but the most important one remains EU-Vietnam Free Trade Agreement (EVFTA). The agreement aims to boost trade and investment between all countries members of the European Union and Vietnam by removing tariffs and other barriers to trade in goods and services, as well as promoting sustainable development and human rights. Under the EVFTA, the EU will eliminate tariffs on almost all goods imported from Vietnam over a 10-year period, with some exceptions for sensitive products such as rice and textiles. Vietnam on its side will eliminate tariffs on 71% of EU goods upon the entry into force of the agreement, with the remaining tariffs phased out over a period of up to 10 years. The agreement also includes provisions on intellectual property, public procurement, investment protection, and sustainable development. It sets high standards for labor rights and environmental protection, and includes a mechanism for dispute settlement. The EVFTA has been hailed as a significant step forward in EU-Vietnam relations, and is expected to boost bilateral trade and investment.
Bulgaria maintains a diplomatic presence in Vietnam through its embassy in Hanoi. The embassy is responsible for promoting bilateral relations between the two countries and providing consular services to Bulgarian citizens in Vietnam. In addition to the embassy, Bulgaria is one of the countries covered by The Central and Eastern European Chamber in Vietnam (CEEC Vietnam) network. The CEEC Vietnam is a non-profit organization that aims to promote economic and cultural cooperation between Central and Eastern European countries and Vietnam. Its role is to facilitate trade, investment, and networking opportunities for our members, which include companies, business associations, and other organizations and individual entrepreneurs.
If you are interested to know more about Bulgaria, please do not hesitate to reach out to us.
Sources: IBA, manager.bg, investor.bg, EY, Ministry of Energy of Republic of Bulgaria, sciencebusiness.net, CEEC Vietnam and other related press articles.
Contact information in Bulgarian – Tsvyatko Kabahchiyski – CEEC Board Member.